EDITORIAL - A clean start on power project

The US$36.85-million performance bond belatedly posted by Energy World International (EWI) on the 381-megawatt power plant it is to build and operate in Jamaica should be immediately returned, the current process abandoned, and the Government return to the market with a new bid that is transparent and can pass muster with international partners such as the multilateral financial institutions.

This new process, we insist, should be removed to the Office of the Prime Minister, with direct oversight by the head of government, Mrs Portia Simpson Miller, with help from contracted international experts. For it is clear that the Office of Utilities Regulation (OUR), which has disputed the posting of the bond, and Phillip Paulwell's energy ministry do not, at this time, have the competence to manage such a project. Further, the prime minister should cause a review of the fiasco that has attended this project to determine what agencies and indivi-duals should be subject to her sanctions.

TIMELINE BREACHED

We have reluctantly arrived at this position, only in part because of EWI's breach of the timeline within which it was to make the payment. There is, too, grave uncertainty over that company's ability to meet other performance criteria.

For instance, while the timeline for these deliverables may not have yet arrived, it is difficult to appreciate why, given EWI and its associate company, Energy World Corporation's supposed control of the gas fields in the Sengkang area of Indonesia, it has found it difficult to provide bankable assurances, including export permits, of its ability to deliver LNG to Jamaica.

Just as critical is the absence of confidence by the Inter-American Development Bank (IDB) in "the bidding process" by which EWI was ultimately selected.

Certainly, the IDB's position not "to participate in the project financing", unfortunately delivered at the eleventh hour, is a negative signal to other multilaterals such as the World Bank's subsidiary, the International Financial Corporation, without whose imprimatur and mix of funds the risk premium on the project is likely to be high. That, in turn, places into question EWI's ability, about which there was already doubt, to deliver electricity to the grid at 12.88 US cents per kilowatt-hour.

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The effect of the IDB's position notwithstanding, we are surprised that EWI was not farther along with its private financing arrangement for a US$730-million project; that it was at the last minute before its performance bond was due that the bank's confirmation of its participation was sought; and at the seeming informality with which communication on this important issue was approached.

But even as we are clear about EWI's forfeiture of its position as the preferred bidder, we do not propose that the Government move to the next in line for the project, the consortium, Energise Jamaica, on two grounds.

The more important of these is that the delivering of electricity to the national grid more expensively than was offered by EWI will not deliver the result hoped for when this project was first proposed: a substantial lowering of energy costs to the Jamaican economy and enhancement of the competitiveness of domestic firms.

Additionally, there is, at best, ambiguity over whether the removal of EWI would, of itself, cure the flaws in the bidding process, about which the IDB complained. In that regard, the Government should think carefully about implementing a process that, while ensuring transparency, does not significantly delay the project or further damage public confidence.

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